Strike Threat Looms Over Kroger, Safeway, Supervalu

With Southern California grocery workers moving closer to a strike, Kroger (KR), Safeway (SWY) and Supervalu (SVU) could suffer a repeat of a 2003 strike that saw customers defect to rival stores.

Nonunionized discount retailers like Target (TGT), Costco Wholesale (COST) and Wal-Mart Stores (WMT) as well as upscale chains like Whole Foods Market (WFM) would stand to gain from a work stoppage.

On Thursday night, the union representing workers from Kroger's Ralphs, Safeway's Vons and Supervalu's Albertsons gave notice of its intention to cancel a contract extension. The dispute centers over health coverage.

Shares of the three grocery chains were falling, while those of Target, Costco, Wal-Mart and Whole Foods were rallying.

Southern California is one of the largest and most competitive grocery markets in the country, with stores serving various ethnic communities also carving out their own niches.

A strike would also come at a time when grocers are coping with rising foods prices and limits to how much they can pass on increases to shoppers.

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03/23/2015 01:45 PM ET

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